InsuranceNewsNet Magazine January 2011 : Page 28
Brought to you by: The Official News Source for the Annuity Industry™ Indexed Annuity Sales Grow, Fixed Annuity Sales Slide Third-quarter annuity sales reports included a 16 percent increase in indexed annuities (IA), to $8.7 billion, but that could not reverse an overall slide in the total fixed annuity sales, which dropped 12 percent to $19.5 billion, as compared to the third FIXED quarter of 2009. ANNUITIES IAs have grown to comprise 41 INDEXED percent of the total fixed annuity ANNUITIES market, even though the interest rate environment remains low. The aver-age cap on an IA was approximately 4 percent, as compared to the average rate of 3.14 percent for fixed annui-ties, according to data from AnnuitySpecs.com. The overall drop in fixed annuities is due in part to the growing trend of carriers dropping their tradi-tional fixed annuity business because it was lacking profitability, not capacity. Insurers that have exited the market found that they could not offer premi-ums low enough to achieve price points that consumers found affordable. year. However, VA sales held steady to the month prior with a total of $1.4 bil-lion, the annuity sales survey reported. IA Safety Sells Well in Recessions Indexed annuities continue to gain popularity among investors looking for some level of safety since the eco-nomic downslide began approximately 18 to 24 months ago. The years 2009 and 2010 show record sales growth, which is attributed to the extra time allotted to insurers for market education, accord-ing to the Hartford Courant. The recent product growth coin-cided with increased market aware-ness of guaranteed income riders — key selling features for IAs. With an increasing number of people near-ing and entering retirement, there is a natural upsurge in consumers seek-ing out a guaranteed source of income, the newspaper reported. 16% 12% Women Buy 60% of Immediate Annuities Six of every 10 immediate annuity con-tracts are purchased by females, concluded LIMRA’s Guaranteed Annuities report that studied more than 55,000 of these contracts issued during 2008 and 2009. Furthermore, the immediate annuity study revealed the following: the average purchaser’s age is 73; the average premium was roughly $107,000; lifetime guaranteed income contracts were added by 70 per-cent of the immediate annuity purchas-ers; and 90 percent of the lifetime income annuitants had opted for guaranteed pay-ments for either a particular time period or a guaranteed refund that allows benefi-ciaries to recoup some to all of the residual premium, according to LIMRA’s findings. The report’s purpose was to identify the demographics of top annuity purchasers, so that insurers can more precisely cus-tomize their products to entice target customers and absorb more of the esti-mated $250 billion unrealized annuitiza-tion market. prior-quarter’s six newly issued life-time benefits, according to the Insured Retirement Institute (IRI). More than 60 changes were filed by carriers in the third quarter this year, whereas 76 were placed in the last quarter. Additionally, carriers seem to have settled their price adjustments to match the new economic situation, the report said. Also, out of the 11 new living benefits filed this quarter, nine were lifetime withdrawal. Visit AnnuityNews.com for exclusive sales ideas: Help Your Clients Retire Comfortably By Brian D. Mann Your clients are probably nearing retirement. You are the key to putting the gold into their golden years. Banks Sell More VAs than Fixed Annuities Fixed annuity sales dropped below variable annuity sales in the bank channel for the first time since January 2008, the Kehrer-Jackson Monthly Bank Annuity Sales Survey revealed. Overall bank-sold fixed and VA sales totaled $2.6 billion for September 2010, showing an 8 percent decrease from the month prior and a 17 per-cent drop from September 2009, the month when fixed annuities had made up for subpar VA sales. In particular, September’s bank-channel fixed annu-ity sales dropped 17 percent to $1.2 bil-lion, decreasing by 41 percent com-pared to the same month in the prior Is RIA Right for You? By Mike Walters Lots of IMOs are telling insurance producers they should seriously think about getting a securities license, but look before you leap into the fiduciary pool! Why So Much Misinformation on Indexed Annuities? By Sheryl Moore VA Benefits’ Levels Rising Nineteen new benefits were issued during the third quarter, tripling the 28 InsuranceNewsNet Magazine January 2011 Your prospects have many sources of information about indexed annuities – almost all of it is wrong.